The race to post Lagarde in the ECB begins, applications by November 6th

The race to succeed Christine Lagarde at the helm of the European Central Bank officially opens, with the Netherlands and Spain in the front row to win the presidency of the Eurotower. The twenty-one Eurozone countries will have until Friday 6 November to submit their candidacies, in view of a first political discussion between finance ministers at the Eurogroup on 9 November in Brussels.

The president of the Eurogroup, the Greek Kyriakos Pierrakakis, gave an acceleration to the game, after the announcement by the number one of the ECB that he wanted to leave office on 7 February 2027, almost nine months before the natural expiry of the mandate.

The challenge looms above all between two former central bank governors: the Dutch Klaas Knot and the Spanish Pablo Hernandez de Cos, supported by their respective governments. The two represent two opposing sensibilities in monetary policy, although both are considered pragmatic and capable of building consensus: Knot is traditionally considered a hawk, more attentive to the risks of inflation. While De Cos is considered closer to the positions of the doves, in favor of a less restrictive monetary policy.

Germany had considered supporting the president of the Bundesbank Joachim Nagel for the post-Lagarde period, but would have put the idea aside, now aiming to maintain a leading role in the Executive Committee, looking above all to the chair of chief economist, now held by the Irishman Philip Lane, or even to the financial markets portfolio currently entrusted to the German Isabel Schnabel.

Among the possible prominent German candidates, the names of economists Markus Brunnermeier, professor at Princeton, Ulrike Malmendier, of the University of Berkeley, Tobias Adrian, former senior official of the International Monetary Fund, and former Finance Minister Jörg Kukies have circulated in the press.

However, the position of chief economist would also be coveted by France, which would be ready to support Knot in exchange for the position. The competition between Paris and Berlin is thus intertwined with that between Holland and Spain for the presidency, paving the way for a possible overall agreement on appointments. The succession to Lagarde is in fact part of a larger issue, destined to reshape the balance at the top of the Frankfurt institute in the space of a few months.

On January 3, Schnabel will leave her post, destined for the International Monetary Fund, while Lane's mandate will expire at the end of May. Three boxes to be assigned which could merge into a single political agreement between the capitals, with the aim of closing the nominations by December. The timing is also particularly delicate for the presidential elections in France in the spring.

After discussion in the Eurogroup, the Council of the European Union will make a recommendation to the European Council, which will proceed with the appointment after consulting the European Parliament and the ECB board. For the choice in the Council of the EU, a strengthened qualified majority is needed, i.e. the support of at least 16 out of 21 Eurozone countries, representing 65% of the population. The members of the ECB executive, including the president, receive a non-renewable eight-year mandate.